Strategic University: Updated Reading Recommendations

Lots of new readers lately. And whenever that happens, I usually get asked about what I'm reading, or more generally, what to read if you're looking to expand your knowledge about stocks, trading, markets, and economics. To the right on the home page of the Insider I've posted four new links of books I like. I won't do a full review here. But I'll give you a brief description. 1) Reminiscences of a Stock Operator, Jesse Livermore. First recommended to me by Steve Sjuggerud seven years ago. If you want to find out how stocks are manipulated, legally (since it's done by Wall Street, and not someone off the Street), this is the best place to start. As true today as it was when Livermore was making millions during the Crash. 2) Economics in One Lesson, Henry Hazlitt. Years ago in graduate school a student stymied an economics class I was in by suggesting that if you really wanted economic growth, you ought to go around breaking windows. After all, it meant more business for the window repairman. And with extra money in his pocket, the ripple effect would begin, i.e. the window repairman would have lots of money to pour into the economy. All wrong, of course. But hard to put your finger on exactly why. Hazlitt helps you follow your instincts with clear arguments. In the case of the broken window (originally penned by Frederic Bastiat), what's important is what never happens because the window is broken. What never happens is that the baker whose window was broken never gets to spend that money on something else, something that produces wealth without an act of destruction preceding it. Hazlitt tackles inflation, unemployment, price controls and international trade, demolishing the kind of knee-jerk bar-stool economics you read in so many newspapers or hear on television. If you're looking for one single book to understand economics, this is it. 3) Against the Gods, The Remarkable Story of Risk, Peter L. Bernstein. I'll be writing about modern attempts to manage risk through derivatives later this week. But if you want the history of it, Bernstein's book is as good as it gets. 4) The Fatal Conceit, Friedrich Hayek. John Maynard Keynes is the most famous economist of the 20th century. But it should Friedrich Hayek. And perhaps Hayek will get the credit he deserves as the social welfare states of the West run into all the economic, social, and moral problems he correctly foresees coming. He's a bit brainy. But Hayek's thought is a great antidote to the government-must-find-a-solution clap trap that is the squishy bedrock of so many current debates about economic policy. 5) Restoring the Lost Constitution, Randy E. Barnett. I haven't actually read this book yet, but it's been on my list since it came out. If you have and want to review it, send me a note. I tend to be skeptical when people are nostalgic for America 100 years ago, or an America they think existed and never did. However, I'm also of the opinion that there's a growing gulf in America over expectations for government action/protection. On one side you have conservative/libertarian/rural folks, basically laissez faire. On the other hand, you have urban progressives (or trans-national progressives as they call themselves.) Of course definitions don't mean much. Bush calls himself a conservative, but he's a big spender and wants to amend the Constitution over gay marriage, neither of which are "Federalist" or "states rights" positions. Still, civil society in America seems increasingly stretched, with positions at the extreme entrenched and folks in the middle being asked to choose. Economic distress only amplifies this political problem because it leads to calls for government action, or conversely, calls for the government to scale back its massive social promises, defense spending, and regulation and give back citizens their tax dollars. I'm not sure, but I think Barnett's book might shed some light on what kind of America we'll be living in for the next fifty years. I'm not reading any fiction right now. However, now that I'm settled in to my new London digs (for awhile anyway), I'll let you know if I come across anything good.